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Speaker 1: Welcome to Fear and Greed Q and A, where we

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Speaker 1: ask and answer questions about business, investing, economics, politics and more.

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Speaker 1: I'm Sean Aylmerant today. Is the market volatility right now

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Speaker 1: just noise we have to look through? Or is it

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Speaker 1: something more? Todd Whore is LGT Crestanes, Head of Public

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Speaker 1: Markets Todd Welcome back to Fearing Greed Q and A.

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Speaker 2: Thanks for having me Sean.

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Speaker 1: So is it just noise or something more to it?

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Speaker 2: Well, I think we probably need to look at that

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Speaker 2: through a few different lenses. I mean, I think one

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Speaker 2: of the more interesting things that we've seen is that

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Speaker 2: it feels different this time. But we've got to go

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Speaker 2: back and remember that in twenty eighteen we had a

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Speaker 2: trade war, albeit it was a bilateral trade war for

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Speaker 2: the most part between the US and China. But we

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Speaker 2: have a very similar situation this time around. And let's

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Speaker 2: not lose sight of the fact that from twenty eighteen

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Speaker 2: through to just recently markets had almost doubled. So even

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Speaker 2: though things feel different this time, we'd almost argue that

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Speaker 2: if you take a long enough lens, things are actually

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Speaker 2: eerily similar. Orbit starting points are obviously different, but we've

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Speaker 2: had multiple Middle East conflicts over the last fifteen to

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Speaker 2: twenty years, probably longer than that if we put a

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Speaker 2: longer term lens on that. If you look domestically, yes,

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Speaker 2: the RBA cashrade at three point eight five percent feels high,

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Speaker 2: but you go back prior to twenty twelve, and three

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Speaker 2: point eight five would feel very very low. And so

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Speaker 2: we sit here and we ask ourselves, is today's environment

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Speaker 2: vastly different from some of the regime changes that we've

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Speaker 2: seen before. Yes, the ESAI is transformative, it's disruptive, but

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Speaker 2: so was the mobile phone, so was the internet, so

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Speaker 2: was migration to the cloud. So there are a lot

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Speaker 2: of things and a lot of starting points that potentially

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Speaker 2: make today different. But there are also a lot of

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Speaker 2: similarities that I think mate today investing environment no more

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Speaker 2: uncertain than what it has been over a very very

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Speaker 2: long period of time. There are similarities the starting points

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Speaker 2: that are just a little bit different. Maybe One of

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Speaker 2: the things that I think is different, and this is

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Speaker 2: not a bad thing. I think this is actually a

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Speaker 2: very strong positive, is that the ability to build portfolios

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Speaker 2: in this environment for all of these different situations is

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Speaker 2: much easier than what it was for the better part

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Speaker 2: of ten to fifteen years. You would rightly remember that

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Speaker 2: if we go back to the early part of the

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Speaker 2: last decade and for the longest period, everyone got funneled

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Speaker 2: into equities. It was great for my career because I

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Speaker 2: spent my career looking at equities, and everyone was looking

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Speaker 2: to build their entire portfolio chase yield and income and

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Speaker 2: dividends only through one asset class. And yet now we've

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Speaker 2: got bonds, we've got high yield credit, we've got private credit,

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Speaker 2: we've got alternative assets that weren't mainstream five or even

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Speaker 2: ten years ago. And so now even though things feel uncertain,

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Speaker 2: they feel different, they might feel volatile. The ability to

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Speaker 2: build a defensive portfolio, I think, is that much that

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Speaker 2: much greater than what it was in the past.

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Speaker 1: Is that a reflection of technological change more than anything else.

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Speaker 2: I think the speed at which information is disseminated is

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Speaker 2: certainly quicker than what we have experienced in the past.

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Speaker 2: It feels like bear markets these this time around, certainly

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Speaker 2: last they're certainly shorter, and they're sharper. What I would

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Speaker 2: say is that I'm not sure it's technological in the

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Speaker 2: sense that information is disseminated quickly, that is true, but

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Speaker 2: I think the playbooks that regulators are, central bankers, politicians

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Speaker 2: have at which to I guess, navigate all of these

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Speaker 2: uncertainties is just vastly better prepared than what it has been.

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Speaker 2: And so I think that means that yes, we get

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Speaker 2: these short, sharp corrections, but the willingness and ability of

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Speaker 2: policymakers to respond rapidly and aggressively is just far greater

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Speaker 2: than what it used to be.

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Speaker 1: As we're talking about this, we haven't mentioned Donald Trump once.

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Speaker 1: Now there's a tariff war. Sorry that we've mentioned the

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Speaker 1: trade war, and obviously tariff's a big issue. But in

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Speaker 1: a sense, I feel that you're kind of looking through

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Speaker 1: the Trump effect, whatever that is, for good or bad,

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Speaker 1: and kind of it's about markets. It's about your normal

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Speaker 1: portfolio construction, making sure you know at risk, reward, etc.

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Speaker 1: As opposed to fixating too much on what's happening in

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Speaker 1: the White House.

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Speaker 2: Well, and I think it's important that, yes, we've all

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Speaker 2: read articles where perhaps there is this notion that if

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Speaker 2: we pay attention to the noise, pay attention to the news,

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Speaker 2: we are going to be better informed to make better decisions.

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Speaker 2: After all, Trump does tweet more often than we've ever

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Speaker 2: seen before, and there is information in that. But I

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Speaker 2: think if again, if you just take one step back

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Speaker 2: and we ask ourselves. For example, the one Big Beautiful

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Speaker 2: Bill Act that he got through, that was his signature

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Speaker 2: domestic policy. It was all about the extension of the

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Speaker 2: tax cuts that he initiated in his first turn. The

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Speaker 2: noise around it that is interesting. It sells newspapers and

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Speaker 2: the like. But the way we approach it and look

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Speaker 2: at it is he could not have got that through,

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Speaker 2: We don't think unless he was able to get offsetting

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Speaker 2: tariffs through. And what do we mean by that. We

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Speaker 2: don't mean that they're intrinsically linked, but we look at

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Speaker 2: it within the constraints with which he can operate. So

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Speaker 2: if he got that one big beautiful bill through and

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Speaker 2: there was significant fiscal stimulus without offsetting cost measures within

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Speaker 2: the bill or without revenue raising from the tariffs, what

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Speaker 2: would have happened, we think, is that the bond market

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Speaker 2: would have voted like we saw with Liz Trust in

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Speaker 2: the UK and yields would have gone higher. And so

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Speaker 2: what do we mean by all of that? He operates

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Speaker 2: within a constraint that the bomb market will only allow

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Speaker 2: him to do so much, and so a similar situation

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Speaker 2: with power. We read all of the bashing that FED

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Speaker 2: chairman Powell has been receiving, and obviously he went and

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Speaker 2: fired the head of the Bureau of Labor Statistics only

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Speaker 2: last week, so they get why people focused on that.

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Speaker 2: But at the end of the day, the legislative hurdles

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Speaker 2: for him to go and fire and dismiss power are

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Speaker 2: very very great. Also, if he were to go and

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Speaker 2: do something like that, we suspect that FED independence, FED

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Speaker 2: credibility on inflation and all of the rest that goes

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Speaker 2: with it would also get called into question. And again

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Speaker 2: the bomb market would vote, and we think that they're

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Speaker 2: important in that all of the noise creates seeming uncertainty.

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Speaker 2: But if you look at all of it through the

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Speaker 2: lens of what can he do, not what will he do?

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Speaker 2: Not what should he do? Not what does he want

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Speaker 2: to do? But what can he actually do within the

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Speaker 2: constraints of either the bomb market, the equity market, the

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Speaker 2: currency market, the judicial system, it actually means he can't

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Speaker 2: do as much as what everyone thinks or what he

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Speaker 2: can do gets corraled or guardrailed, And we think that's

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Speaker 2: pretty important for investors.

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Speaker 1: Todd thanks for talking to Fear and Greed.

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Speaker 2: Thank you.

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Speaker 1: That was Todd Hare, LGT Krestan's head of Public Markets.

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Speaker 1: This is general information only. Should always seek advice before

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Speaker 1: making investment decisions. Remember if you've got something you'd like

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Speaker 1: to know, then send through your question on LinkedIn, Instagram, Facebook,

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Speaker 1: or at fearinggreed dot com. Today you I'm Jean Almer

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Speaker 1: and this is Fear and Greed at Q and Day